In November 2026, the US Internal Revenue Service published its tax inflation adjustments for 2027. The November 5 release sets the health FSA salary reduction limit at $3,500, the permitted carryover ceiling at $700 and the monthly limits for qualified transportation and parking at $350. The qualified small employer health reimbursement arrangement ceilings rise to $6,700 for self-only coverage and $13,550 for family coverage.

Separate statutory limits from plan terms

Employers should confirm which new amounts they will adopt. A tax ceiling does not automatically amend a plan, and a carryover ceiling does not create a carryover right. Check the documents, enrolment screens and payroll instructions separately. In particular, distinguish a salary reduction election from an employer reimbursement and a monthly commuter limit from an annual health benefit election.

Check the first payroll

Test elections at and above the relevant limit and include unused balances where carryover is permitted. Give the administrator and payroll provider the same effective date and ask them to show how they report exceptions. Reconcile a sample of actual deductions to the employee elections as soon as the new configuration goes live.

Tell employees what the plan allows, whether they must make a new election and whom to contact if the enrolment record and payroll do not agree. For a multinational, record the jurisdiction, effective date and decision owner in a common register, while leaving the local amounts and treatment to the applicable rules. This makes the change auditable and avoids confusing a federal maximum with a benefit the employer has promised.

Sources

IRS – 2027 inflation adjustments

Source: 2026-11-08_GBV_IRS_Benefit_Limits.docx